COMPETITIVE INTELLIGENCE MANUAL

PREPARED BY

INDRAJIT SARKAR ISBM, NOIDA 2009-2010

TABLE OF CONTENTS
TABLE OF CONTENTS.............................................................................................2 INTRODUCTION...................................................................................................... 3 SOURCES OF COMPETITIVE INTELLIGENCE............................................................3 SOURCES OF COMPETITIVE INFORMATION.............................................................4 INFORMATION INTELLIGENCE.............................................................................6 COMPETITIVE INTELLIGENCE PROCESS..................................................................6 COMPETITIVE INTELLIGENCE FRAMEWORK............................................................7 BENCHMARKING...................................................................................................11 REVERSE ENGINEERING.......................................................................................11 PORTERS FIVE FORCES MODEL (BARGAINING POWER MODEL)..........................12 SUPPLY CHAIN ANALYSIS.....................................................................................14 CONCLUSION....................................................................................................... 16

INTRODUCTION Our world today is driven by edgy competition. The demand for goods and services is not at par with the number of providers; i.e. there is not sufficient demand for these goods and services compared to the suppliers base present in the market, which is huge. To manage the steep competition, organizations need competitive intelligence. Competitive intelligence (CI) analyzes data and information strategically which allows a manager to get insights into what might happen in the near future. Therefore, competitive intelligence helps one to validate their assumptions and also fill in loop holes which were earlier not considered. What is Competitive Intelligence? Competitive intelligence is an ongoing process through which the managers of an organization develop its competitive advantage. It is an act of collecting and assorting intelligence about the goods, services, customers and competitors so as to facilitate the managers in making strategic decisions for their organizations. Which all information will competitive intelligence provide? What are my competitors doing now? Top line and bottom line New products and services Their features and performances What will my competitors do tomorrow?

New products
New services

New technologies New markets

SOURCES OF COMPETITIVE INTELLIGENCE

Where does the information come from? No organization works in seclusion, whenever money is exchanged; information is also transferred. In the process of its operation, organizations often release information regarding promotional and other activities. Many organizations also share customers, suppliers and dealers. Interviewing them will help in extracting valuable information. There are several ways of collecting the information one needs: Buy a competitors product Hire their employees Visit their booths at trades shows and conferences Talk to their vendors

Conducting market research and collecting feedbacks

Coming across new patents through the research and development

departments Sales representatives who deal with customers on daily basis can extract valuable information regarding competitors campaigns A lot of information can also be readily available on the internet where most companies post their advertisements and research papers.

SOURCES OF COMPETITIVE INFORMATION Direct sources Passive Web Press releases Industry and market analyst Government filings Financial analyst Employment ads

 Active Trade shows Technical conferences Employment interviews Meetings and panels Indirect sources Customer interviews Customer surveys Sales force Distributors Suppliers Business partners Former employees

What intelligence can be obtained legally and ethically? About 80% to 90% of all information is public knowledge
New competitors

Competitors actions New markets Marketplace changes New legislation New technology

INFORMATION INTELLIGENCE According to the perspective of competitive intelligence; intelligence is different from data, information or knowledge. Information and data put together will develop intelligence. Difference between information and intelligence:

The provision of intelligence alone is incomplete without the implications of the intelligence for the business and recommendations that outline appropriate business responses. Thus, based on these understandings, competitive intelligence can also be called as actionable intelligence

COMPETITIVE INTELLIGENCE PROCESS The competitive intelligence process comprises of Identifying the intelligence needs of key decision makers across the firm Collecting the information from secondary and primary sources Analyzing the information and upgrading it to intelligence Disseminating the intelligence to decision makers

Data may consist of unrelated facts, numbers, symbols, words, names, codes and other various items. Often these data are out of context and unrealistic. They will only make meaning once they are integrated together. Add more explanation

COMPETITIVE INTELLIGENCE FRAMEWORK Strategic intelligence Strategic intelligence is concerned primarily with the understanding of competitors future moves, strategies and goals. Strategic intelligence means having understanding about organizations business environment, for long term viability and success.

Common applications of strategic intelligence are: Development of strategic plans of an organization Developing capital investment plan
Decisions on mergers, acquisition, joint ventures and policies

Long term research and development planning

Tactical intelligence Tactical intelligence has implications for its viability and success in the immediate future. It often concerns such matters as marketing, promotion, pricing, and positioning. Tactical issues include competitors terms of sale, their price policies and the plans they have for changing the way in which they differentiate one or more of their products from yours. Middle level marketing and sales managers comprise some of the main users of tactical intelligence. They want to know how to win the day, today. Tactical analysis identifies shorter term issues, in an area where prompt action can prevent a situation from deteriorating or developing. It assists in the management of current operations and plans, as well as relocation of resources and efforts according to changing needs or problems.

 Business intelligence The right information at the right time can make the world of a difference in the deciding the fate of business, success or otherwise. Business intelligence applications include the activities of decision support, query and reporting, online analytical processing, statistical analysis, forecasting and data mining. It can be described as the process of enhancing data into information and then into knowledge. It widely concerns itself with information technology solutions for transforming the output from large data collections into intelligence, usually through the integrations of sales, marketing, servicing, and support operations. It covers such activities as customer relationship management, enterprise resource planning and e-commerce using data mining techniques. People involved in business intelligence tend to regard it as one aspect of knowledge management.
Counter intelligence

Counter intelligence is defending company secrets. Every company has competitors who are interested in knowing their plans. Often this area of endeavour will involve security and information technology, but others are often overlooked like - hiring and firing strategies, containing competitors opportunities within the firm. In the light of the fact that there is a very thin line that separates competitive intelligence from industrial espionage, counter intelligence is to help companies counter the devastating effects of a successful competitive intelligence aggression against their interests. It looks to identify potential adversaries and threats whether they are geo-political or economic and offer solutions to becoming stealth to information gathering intrusions.

Corporate counter intelligence is the reverse form of business espionage and business intelligence. It could also be described as the other side of the intelligence coin and its main aim is to protect business information from those who are not authorised to receive it, to counter potential threats and to enhance security.
It

protects

not

only

against

hostile

intelligence

services

or

organizations, or individuals engaged in espionage, sabotage or subversion but also against legal collection efforts that can harm a company and affect its ability to compete in its market.
It spots the danger signals; prevents illegal activities such as electronic

eavesdropping; carefully control critical information that a company publishes about itself making it difficult to collect information vulnerable to business.
Intellectual property and confidential information are the areas usually

neglected by management as well as security managers. They do not really concern themselves with loose lips, discarded documents, tradeshows, friendships, press and dissatisfied ex - employees.
Trade secrets, patents, formulas, processes, pricing strategies, industry

sources, client information are becoming more and more critical to maintain a competitive edge.
Confidential information again concerns the infrastructure, personnel

records, internal communications, agreements, supplier agreements, reports, work procedures, research etc.

Technical intelligence

It is one of the sections of competitive intelligence covering all the technical activities that is concerned with researches, which in turn will facilitate process or services.

Technological obsolesce rate is very rapid. So, being sound with technical intelligence gives the organization an upper hand in knowing about the opportunities and threats arising from emerging technologies that could be critical to an organizations competitive position.
Competitor intelligence

It refers to the original form of externally oriented business intelligence that preceded knowledge management or data mining as the primary concern of executives responsible for increasing market share. It concerns the current and proposed activities of competitors. Competitor intelligence takes the narrower view and focuses on profiling a specific organization. Strategies Plans for new products Financial health Joint ventures, strategic alliances, mergers and acquisitions Changes in earnings and compensation schedules Who are the key executives Competitive intelligence takes the narrow view. Emergence of new technologies Shifting demographics Changing in consumer spending and lifestyle trends Political upheavals at home and abroad Opening of new markets Government policies - domestic and international

BENCHMARKING Benchmarking involves analyzing what you do, quantifying it, and then finding whether the other firms do it differently or better or not at all. Then you adapt not just adopt, what you have learnt to your own firm. It is used to analyze your firms efficiency by comparing its performance against performance levels of a number of other firms. Another application of benchmarking is to compare your firms standards of operations with those of its competitors. In this case, the goal is not to determine the most efficient cost levels of each component of an activity. Instead you undertake a process that enables you to compare your performance with that of another firm. Those in planning and marketing most often use one form of

benchmarking. That form focuses on what the competition does better and how your firm can catch up or even overtake those competitors.

REVERSE ENGINEERING It is the process of taking an existing product, disassembling it in a forensic - like manner and examining the component parts and the technology used in its production. It involves acquiring, usually buying at retail, and then dismantling a product to identify how it was designed and constructed. This process enables an investigator to estimate costs and evaluate the quality of the product. In case of non patentable processes and devices, it can also provide information on how to produce a competitive, a compatible, or a substitute product.

Reverse engineering primarily supports new product development by disclosing the costs involved in making products. However, reverse engineering products can often provide assistance to other functions:
It may show you how to pack and ship your products at a lower cost or

with less damage for the same costs

It may show you that there are less costly ways to accomplish similar

ends, in terms of the costs of raw materials or the manufacturing techniques used It may also be used to convince your own personnel that a particular innovation or modification is really possible Another reason for reverse In the engineering fiercely is to decrease global product markets,

development

times.

competitive

manufacturers are constantly seeking new ways to shorten lead times to market a new product. By using reverse engineering, a three dimensional product or model can be quickly captured in the digital form, re modelled and made ready for rapid prototyping/ tooling or rapid manufacturing. Before embarking on reverse engineering, make sure to weigh the costs versus benefits. Reverse engineering can be very costly, especially for one time only type projects or where the components and parts have existing substitutes. Reverse engineering is often more economical for products that require large investments and/or are produced in very high volumes.

PORTERS FIVE FORCES MODEL (BARGAINING POWER MODEL) Michael Porter postulates this model for industry analysis. The five forces that are considered in this model are - the barriers to new entrant, supplier power, buyer power, technological development (substitutes) and rivalry.

Five forces analysis This model believes that there exist five vital forces that define the competitive power in a particular situation. These forces are described below: Supplier power Supplier power constitutes the authority of the suppliers to increase the prices. If there are a limited number of supplier choices and you require their maximum help, then your suppliers tend to be more powerful. Buyer power Buyers are continuously trying to reduce the prices. Here if you interact with the buyers who are powerful, then they are likely to dictate terms to you. Competitive rivalry If there are many competitors presenting products and services which are as good as yours, then your power may diminish in such situation. If suppliers as well as buyers do not get attracted with the deals you offer, they may go elsewhere. Threat of substitution Substitution influences the capacity of your customers of performing the things differently. For example if you create software with the help of which you can run a very crucial process automatically, then people may substitute it by either performing this process physically or by outsourcing it.

 Threat of new entry If new competitors enter the market it may pose a threat to you and your products and services. However if you have a powerful position in the market and you are able to sustain it throughout, then such barriers hardly affect your position. Practical approach which can be followed: Porter's five forces analysis is an important tool to measure the capability of profit earning in an industry. This is generated by analyzing the five forces: Supplier power It increases the prices Buyer power It decreases the prices Competitive rivalry It constitutes the power of competition The threat of substitution Instead of your products and services, substitutes are used The threat of new entry Entry of new competitors in the market and they generate good profits

SUPPLY CHAIN ANALYSIS A great deal of knowledge can be gained by understanding the dynamics behind a supply chain manufacturer, distributor, retailer and customer. The interaction of all of these participants and how they perform together is crucial to remaining competitive. Supply chain analysis has emerged as one of the fastest growing business intelligences application areas.

For example, How effective are distributors in moving products between the manufacturers to the retailer? How does this compare to other similar supply chains? How do marketing, sales, production, other components of the inner chains fit within the overall value chain? The purpose of this analysis is to understand the complexity of the entire process and how can we produce more value for the customer at the end of the process. Following are the key elements of a supply chain: Production Supply Inventory Location Transportation Information

Key components of supply chain analysis:

INDUSTRIAL ESPIONAGE VS COMPETITIVE INTELLIGENCE Industrial espionage means procurement of business secrets from competitors whereas competitive intelligence research is very different from espionage. Competitive intelligence practitioners generally are ethical in their approach and abide by all rules. There is a strict code of ethics laid down by the Society of Competitive Intelligence Professionals (SCIP). This includes the stipulations that competitive intelligence professionals:
Must abide by all applicable laws whether domestic or international

thus, bugging, bribery, and other such illegal practices would be a serious breach of ethical code
Must accurately disclose all relevant information, including ones

identity and organization, prior to all interviews. This ensures that primary research is conducted ethically without misrepresentation. As such it also limits attempts to gain information through lies about ones identity which would be viewed as industrial espionage CONCLUSION Competitive Intelligence has undergone a upsurge of interest in recent years, an interest in part fuelled by an increasing availability of information itself. The primary output from competitive intelligence is the ability to make forward looking decisions and determine strategies based on the following key intelligence topics:

 What is the detailed global position of your business and that of your competitors in terms of market shares, strengths by product lines and region? What actions have your competitors taken in the past few years that have changed the competitive landscape? What are you most afraid your competitors might do in the next few years to change the competitive landscape? Competitive intelligence drives strategic decision making and market leadership. Following are some of the key highlights pertaining to competitive intelligence:
Human Intelligence is often more valuable than simply collecting

published information This is a more direct approach to information analysis One of the quickest ways to learn about your competitors and their product is to attend an industrial trade show
Since competitive intelligence is externally driven, it is invaluable for

risk management
Competitive intelligence is incomplete unless you engage in counter

intelligence. You need to protect your company against intelligence leaks that benefit the competition Competitive intelligence is more concerned with understanding the bigger picture and having the right perception of the market. Competitive intelligence is not being pre occupied with exact precision since we are trying to gain insights into the major forces impacting our firm through various analytical models. Managing competitive intelligence cannot be subject to sole technical solutions. Enabling technology to assist managers in their intelligence scanning and analysis activities is a challenging task

Therefore, effectively managing competitive intelligence will rely much on An organizational vision Sharing tacit knowledge Establishing an intelligence culture
Redefining

the

process

of

intelligence

gathering,

analysis

and

propagation Some concluding statements on implementing a competitive intelligence program: Determine exactly what is it that you need to know Without an infinite budget you will end up knowing nothing about everything You already know most of what you need to know. You just do not know you know it You need a system to collect and organize information so it can be analyzed By the time you establish an excellent, full time competitive intelligence function, you will no longer need it
Real in depth competitive intelligence cannot be done in an instant.

Some things are not in Google You will have to Wait for opportunities such as shows and conferences Recruit and maintain sources Develop systems or channels Find or learn the optimum techniques for getting specific data
A half an hour break - out session at the annual planning retreat is no

excuse for real competitive intelligence.